9911796707
TMI Blog1992 (6) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... roved Valuer of the assessee Shri A.P. Saxena estimated the cost of construction at Rs. 5,10,000. As against this, the Departmental Valuation Officer estimated the cost of construction of factory building at Rs. 12,49,000. While coming to this conclusion the Assessing Officer observed as under :-- " (i) Assessee company's valuation report is too sketchy and vague whereas the Government valuation report gives a detailed description of the construction undertaken. The assessee company's valuation report has completely omitted several aspects of the construction including compound wall, Bitumen Coated Rods and Steel Gates whereas the Government valuation report has given a detailed description and value these aspects of the construction. The rates of the construction shown in the assessee's valuation report is on the lower side as evidenced on comparison with the standard prevailing rates at that time as adopted by the Govt. Valuer. The assessee company itself was given several opportunities to file various supporting documents and details before the Govt. Valuer and the Govt. Valuation Officer has prepared his report after taking this into account and on a physical inspection of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer has observed that the books of account are not acceptable because they are not kept in regular course of business and further day-to-day consumption of material was not maintained and details of stock purchased and used and work-in-progress were not maintained. The learned Departmental Representative tried to get a support from the revised report of the Departmental Valuation Officer wherein the D.V.O. has mentioned that books of account maintained by the assessee did not indicate the purpose for which the payments were made and the approved valuer has not given detail as to how the quantities have been arrived at. In view of these defects pointed out by the DVO, the value declared by the assessee could not have been adopted. Therefore, an estimate was based on the DVO's report. The CIT (Appeals) has gone wrong in reducing the cost of construction as declared by the DVO. The learned counsel for the assessee Shri O.P. Sapra very vehemently argued that the cost of construction arrived at by the DVO is arbitrary and without following proper method of valuation of cost of construction. It was pointed out that the construction cost of assessee's godown has been compared with the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 50,000. No defects were found in the maintenance of the books of account of the assessee. 5. We have considered the rival submissions. We would like to deal with the first point of the assessee relating to rejection of cost of construction shown by the assessee on the basis of books of account maintained by the assessee for construction. In this connection, it will be pertinent to mention here that before the assessing officer the assessee has alleged that it had maintained day-to-day books of account for construction of said property and also kept complete vouchers for the cost of material and labour charges. However, the assessing officer observed that the books of account are not acceptable as the record of vouchers was not kept in regular course of business as such day-to-day consumption of material was not maintained and details of stock purchased, used in construction work and work-in-progress were not given. The second report of the DVO on which the learned Departmental Representative also laid emphasis, speaks of the rejection of books of account in paragraph 23 where it is mentioned that the assessee has not indicated the purpose for which such payments were made and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estimate made by the revenue authorities disregarding the valuation of the assessee is unjustifiable. Similar view was expressed by the Tribunal in the case of Sri Har Sarup Cold Storage General Mills. Therefore, respectfully following the reasoning of that case, we are of the opinion that the revenue authorities have gone wrong in estimating the cost of construction other than what is declared by the assessee without bringing on record the specific point for rejection on the maintenance of books of account. However, the very fact remains that the CIT (Appeals) had made an addition of Rs. 50,000 as unexplained investment. The department is also aggrieved on the deletion made by the CIT (Appeals). In this case the DVO initially adopted the following rates :-- Revised MainBuilding R.C.C. framed structure 5424 Sq. ft. 378068 Rs. 5,92,306 or 504.07 sq.m. @ Rs. 1175 per sq. m. A.C.C. Steel Godown 7260 sq.ft. or 674.72 sq.m. @ Rs. 668 sq.m. 335484 Rs. 4,50,713 Mezzanine Floor 918 sq.ft. or 85.32 sq.m. @ Rs. 926 q.m. 54690 Rs. 79,006 ----------------- 641 Ground Floor 918 sq.ft. or 85.32 sq.m. @ Rs. 1241 sq.m. 75338 Rs. 1,05,882 ----------------- 883 Add for E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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